Gratuity is a statutory right under the Payment of Gratuity Act, 1972, and cannot be denied based on a Labour Court's order refusing continuity of service, unless the specific forfeiture conditions under Section 4(6) are met.

PRAYER :-

Writ Petition filed under Article 226 of Constitution of India, praying this Court to issue of Writ of Certiorari, calling for the records of the 1st Respondent in P.G.Appeal No.2/21, Quash the order dated 19.01.2022, consequently the order of the 2nd Respondent passed in P.G.No.162/16, Dt.25.01.2017, grant such other relief(s) as expedient to the facts and circumstances of the matter.

ORDER

The challenge in this writ petition is to the order dated 25.01.2017 passed by the second respondent and the order dated 19.01.2022 passed by the first respondent confirming the same.

By the impugned order, the second respondent directed the petitioner to pay a sum of Rs.1,10,658/- towards gratuity for the period from 01.07.1973 to 30.06.1987 and from 03.02.1996 to 31.12.2005.

The brief facts leading to the present writ petition are that the third respondent, while serving as a Salesman in the petitioner institution, was terminated from service on 30.06.1987. Aggrieved by the same, the third respondent raised an industrial dispute in I.D.No.148 of 1992 before the Labour Court, Cuddalore. The Labour Court, by award dated 10.11.1995, partly allowed the dispute by setting aside the order of dismissal and directing the petitioner to provide fresh employment to the third respondent, albeit without continuity of service, back wages or other attendant benefits, and in a post other than that of Salesman.

Pursuant to the said award, the third respondent was re-employed on 03.02.1996 and continued in service till he attained the age of superannuation on 31.12.2005. Thereafter, a claim for gratuity was made for both spells of employment. The competent authority, by the impugned order, allowed the claim and directed payment of gratuity for both periods, which was subsequently confirmed by the appellate authority.

The learned counsel for the petitioner contended that in view of the specific direction of the Labour Court denying continuity of service, the first spell of employment cannot be reckoned for the purpose of gratuity. It was further submitted that once continuity of service and attendant benefits were expressly denied, the claim for gratuity for the earlier period is legally unsustainable and the authorities have failed to appreciate this distinction.

Per contra, the learned co unsel appearing for the third respondent submitted that gratuity is a statutory right flowing from the provisions of the Payment of Gratuity Act, 1972, and cannot be denied except in circumstances expressly contemplated under the statute. It was contended that even in cases of termination, gratuity does not lose its character and becomes payable upon cessation of employment, subject only to the limited grounds of forfeiture provided under Section 4 (6) of the Act. Therefore, the orders passed by the authorities are in consonance with the statutory scheme and do not warrant interference.

This Court has carefully considered the submissions made on either side and perused the materials available on record.

At the outset, it is relevant to note that gratuity is not a bounty but a statutory right conferred upon an employee in recognition of long and continuous service. Section 4 of the Payment of Gratuity Act, 1972 provides for payment of gratuity on termination of employment after rendering the prescribed period of service. The right to gratuity accrues on the termination of employment for any reason, including retirement, resignation or termination, subject only to the conditions stipulated under the Act.

The only exception to the payment of gratuity is found under Section 4 (6) of the Act, which permits forfeiture either wholly or partially in limited circumstances, namely:

(i) where the termination is on account of any act, wilful omission or negligence causing damage or loss to the employer’s property, to the extent of such loss; and

(ii) where the services are terminated for riotous or disorderly conduct or for an offence